While perhaps not as robust as 2020’s record-shattering volume, the rest of 2021 and 2022 are expected to see high demand for home purchases, especially as consumers look to secure low mortgage rates and younger generations reach home buying age.
“I think [the industry forecasts] are being a bit conservative for the second half of the year,” Charley Clark, SVP and executive director of mortgage warehouse finance at TIAA Bank, said in an interview. “That's just based on our numbers and our experience. April, May and June performance for us were consistent with production from the second half of last year.”
Although more sellers are listing their properties and falling lumber prices offer cause for buyer optimism, the years-long for-sale inventory shortage have led to ballooning prices and tanking affordability. Cities experiencing rising interest can anticipate more of the same over the next 12 months and some will certainly see a rise above the national average home value growth rate.
Comparing an area’s current housing inventory to historical norms stands as a good barometer of the market’s conditions, according to Zillow Senior Economist Jeff Tucker. Without many choices for buyers, sellers don’t face the competitive pressure to undercut each other, resulting in bidding wars.
“Multiple-offer situations are the proximate cause of a lot of value growth and that information transmits quickly to other real estate agents listing the next batch of homes for sale,” Tucker said in an interview. “But frankly, the best predictor of upcoming price appreciation is the most recent few months of price appreciation. There's momentum intrinsic to that time series that’s much more predictable than other prices, like the stock market for instance.”
Using a model that combines the historic price levels, current market values and supply conditions, Zillow forecasted the year-over-year home price growth by May 2022 in the 100 largest metro areas. From the Sun Belt to the West, local lenders from the top 12 housing markets in expected appreciation rates talk about what makes their cities ripe for a boom.
